Govt e-commerce draft swings between Swadesi and Videshi, likely to be revamped

A few days after releasing key recommendations in its draft e-commerce policy, the government may withdraw many rules which it proposed for e-commerce companies in India.

The development comes after the proposal was severely criticised by companies as they believe that there is a lack of clarity in several aspects. In their view, “deep discounts” have not been defined so far.

The draft policy included barring group companies of e-commerce players from “directly or indirectly influencing” sale prices, prohibition of bulk purchases of branded goods like mobile phones, white goods, fashion items “by related party sellers” and other proposals.

According to the report, the officials are now presenting the draft as a “discussion paper” which has sent to ministries and concerned departments for feedback.

Importantly, the draft was heavily in favour of Indian businesses or small sellers which suggested Indian-owned and Indian-controlled online marketplaces be allowed to hold inventory as long as products are 100 per cent domestically produced.

It also included a separate wing like the Enforcement Directorate to handle grievances related to Press Note 3, which details guidelines for foreign investment in e-commerce.

However, it has flagged by within the department when one of the ministries called it as the heavy legal overlap. They believe that there are existing agencies dealing with several of the aspects. For instance, the Competition Commission of India can act against predatory pricing, while consumer courts already deal with complaints against sellers.

There has been such demand from various quarters that the Indian government should make laws to safeguard their companies from foreign rivals.

In late 2016, the founders of India's top two consumer Internet companies Sachin Bansal and Bhavish Aggarwal called for enforcing protectionist measures against their global rivals Amazon and Uber, accusing these firms of dumping capital to buy customers to become monopolies in the country.

In mid-2018, Flipkart sold its business to a foreign retail giant Walmart.

The lamenting of Aggarwal and Bansal was even then criticised as Flipkart and Ola were two of the three largest foreign venture capital-backed companies in India, which were competing against Amazon and Uber.

It's difficult to comment what prompted the government to create such a strict draft after so many years. It is also very clear that the government has to take a firm position and can't afford to appease both small Indian businesses and foreign behemoths.

The development was first reported by TOI.